PASSWORD RESET

Magazine of the Socialist Party in Australia

People need relief from sky-high housing costs

Millions of Australians suffer from sky-high housing costs but there is no relief in sight for either renters or mortgage holders.

Data from Digital Finance Analytics shows that more than one million households are in mortgage stress. This means these households cannot cover their ongoing costs.

Another report from Standard and Poor’s pointed out that mortgage arrears have risen to the highest level in 20 years. More than half of those in arrears are more than 90 days behind!

If people in this situation happen to lose their jobs, they can quickly find themselves losing their house.

The property price boom has meant that people have had to borrow much more. It is estimated that, in total, Australian households would have to fork out twice the level of their income to pay off all their debts. A desperate situation.

People are under a lot of financial pressure and as a result they often drain their savings and take on even more debt. Data from the big banks shows that credit card and personal loan arrears are also on the rise.

The combination of high housing costs and low wage growth are the main factors that put people in a situation where they struggle to pay their loans and their living costs. Unfortunately, government policies, and decisions of the Reserve Bank, are not helping much.

For those with a typical home loan, the recent interest rate cut will only deliver a saving of about $60 a month. Similarly, the government’s income tax cuts have only delivered a once off rebate of around $1000 for the average worker.

While welcome, it’s unlikely that many will use this to buy extra goods. Most will use it to pay down debt so it will only end up passed on to the already rich banks and money lenders.

During the election the government announced plans to set up a First Home Loan Deposit Scheme. The idea is that the government would act as a guarantor to cover 15% out of the 20% required deposit for a limited number of first home buyers.

Similar state-based schemes designed to make it easier to enter the housing market have not made housing more affordable. The main outcome has been that they have sent a signal to the market to increase prices. In the end people have been forced to pay more.

Millions of renters are also suffering from housing stress – that is, being forced to pay over 30% of your income in rent. Many renters are also living in low-quality homes with insecure, short-term leases.

Because it’s so difficult to buy your own house, more people are stuck renting. Unless drastic changes are made a layer of young people, dubbed “generation rent”, are likely to be renting for life.

The common link between the problems faced by renters and mortgage holders is the rule of the profit motive in the housing sector. While the big banks, property developers, speculators and landlords have done very well out of the so-called housing boom, it’s been at the expense of ordinary people.

For example, Australia’s big four banks have consistently posted record profits from their huge mortgage books. Most of the richest people in Australia are property developers and speculators.

Real solutions to the housing crisis would include taking the big banks into public ownership so that immediate relief could be given to those struggling to pay their mortgage.

Similarly, new developments should be taken out of the hands of profiteers. In that way we could stop unsafe developments – like the Opal and Mascot Towers – and build new affordable housing to cater for people’s needs.

A construction program to build quality public housing could be launched using the existing wealth of the big property developers and banks. In addition to dealing with the huge waiting lists that exist, we could create thousands of well-paid jobs.

In the private rental market landlords need to be subject to much more regulation. Rent controls should be introduced to put a cap on rents. In addition, renters should have the right to demand long-term leases and for their homes to be maintained at a high standard.

These are some of the demands of the Socialist Party’s Renters Fightback campaign. We are campaigning to put these issues on the political agenda, but also to encourage organisations like trade unions to join us in the fight for decent, affordable and secure housing for all.

By Triet Tran